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2013 ADASP Annual MeetingHealthcare Policy/Economics for
AP and SP DirectorsIntroductions & Definitions
– 8:05am-8:45am –Stephen Black-Schaffer, MD, Associate
Chief of Pathology, Massachusetts General Hospital
Notice of Faculty Disclosure
In accordance with ACCME guidelines, any individual in a position to influence and/or control the content of this ASCP CME activity has disclosed all relevant financial relationships within the past 12 months with commercial interests that provide products and/or services related to the content of this CME activity.
The individual below has responded that he has no relevant financial relationships with commercial interests to disclose:
Stephen Black-Schaffer
What goes around, comes around…
Pathologists over the years have had to demonstrate their value in the context of the overall economics of healthcare:
Period of hospital employment/contracting – before TEFRA (1982): pathologist = coordinated care physician. "You earn your living in the clinical labs; you earn your reputation in surgical pathology."
Period of uncertainty – after TEFRA and before RBRVS (1992): "Who will pay a doctor who doesn't see patients?"
Period of professional billing – after RBRVS and before ACA (2010): Every (specialty) tub on its own bottom; value = volume.
Period of uncertainly – after ACA: "Who will pay a doctor who doesn't see patients?"
So, what is going on in the US healthcare economy right now, how did it get to be this way, and what does it mean for us?
How US healthcare came to be the way it is now:
4
X
X = US healthcare:"a paradox founded amidst cataclysms"
A very expensive system of care…
…that doesn't even cover everyone!
1st Cataclysm: The Great Depression
Traditional Rugged Individualism (think TR) +
New Deal Era Social Federalism (think FDR) =
1935 - Retirement (Old Age) Insurance (Social Security Act)
1965 - Health Insurance (Medicare – Social Security Title XVIII)
Public Program of Work Based Welfare (1st paradox)
Health Insurance as a Social Security Benefit =
Welfare based on contributions earned by work −
individual / spousal / parental
2nd Cataclysm: A World at War −
WW II
Shortages of raw materials and of production capacity
1942 Revenue Act => 80% "excess profits" tax
Shortages of labor
National War Labor Board (NWLB) => wage freeze
1943 - NWLB exempts fringe benefits from both wage freeze and profit tax => preferred way to recruit/retain workers and to avoid "excess profits" tax
Private Program of Work Based Welfare (2nd paradox)
Health Insurance as an Employment Benefit =
Welfare based on contributions earned at work −
social support provided as a "fringe benefit"
What makes healthcare expense Public Enemy #1?
Private individuals out-of-pocket = $300 billion; insurance plans (85% employment-based) = $849 billion; government = $926 billion, all sharing => bottom line cost of American health care.
Growing economic internationalization => with more international competition against => competitors bearing less health care cost burden.
Because health care costs abroad => Distributed over entire national tax base
(most other mature industrial economies)Or minimal (most developing nations)But lower (everywhere else but here)!
International Comparison of Spending on Health, 1980–2007
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
19801982
19841986
19881990
19921994
19961998
20002002
20042006
United StatesNetherlandsGermanyOECD Mean**
Average spending on health per capita ($US PPP*)
* PPP=Purchasing Power Parity. ** All 30 OECD countries except U.S.Source: OECD Health Data 2009, Version 06/20/09.
$7,290
$3,837
$3,588
0
2
4
6
8
10
12
14
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18
19801982
19841986
19881990
19921994
19961998
20002002
20042006
United StatesGermanyNetherlandsOECD Mean**
Total expenditures on health as percent of GDP
16.0%
10.4%
9.8%
http://www.commonwealthfund.org/Charts/Report/Why-Not-the-Best-Results-from-the-National-Scorecard-on-US-Health-System-Performance-2011/I/International-Comparison-of-Spending-on-Health-1980-to-2009.aspx
US per capita health spending vs. OECD
<=this is the historical anomaly with which we are still living and, unlike the other countries, it
doesn't even get us universal coverage!
http://www.pbs.org/newshour/rundown/2012/10/health-costs-how-the-us-compares-with-other-countries.html
US percent GDP health spending vs. OECD
http://www.pbs.org/newshour/rundown/2012/10/health-costs-how-the-us-compares-with-other-countries.html
US health spending by category of care
~billing=>
~doctors=>
http://www.pbs.org/newshour/rundown/2012/10/health-costs-how-the-us-compares-with-other-countries.html
With both government and industry each paying what it would cost, anywhere else in the world, to provide the US population with universal coverage,
But one in six Americans still without insurance,
ACA was enacted, simultaneously to achieve universal coverage and to ensure affordable care.
How does ACA, and the private sector initiatives that parallel it, propose to do this, and how does this change the economic landscape for the practice of pathology?
US healthcare reform:
12
Federal strategy
The federal strategy on cost control is two-pronged1 Turn up the heat on volume-based FFS medicine providers
Hospitals: value based purchasing, readmission and hospital acquired condition programs => ≈10% decrease
Physicians: sustainable growth rate => ≈30% decrease
2 Provide alternatives based on risk-sharing for cost of care
#1 - Pay for Performance Programs
#2 - Bundled Care Payment Initiatives
#3 - Accountable Care Organizations (Pioneer, Advance Pay, SSP)
Since FFS just seems to be going from bad to worse, maybe one of the risk-sharing the alternatives will be more promising…
Alternative payment models – the options
#1 - Pay for Performance Programs
Defined by process or outcomes
Can be "add-on" to fee for service (or “take-away”)
Is always an element in bundled or accountable care
#2 - Bundled Care Payment Initiatives
Defined by cost and outcome of episodes of care
Can be an "add-on" to accountable care (or “take-away”)
Can be a "stand-alone" payment mechanism in any setting
#3 - Accountable Care Organizations
Defined for a population of patients by responsibility for both total medical expense and outcome measures
Characterized by population attribution methodology, reference cost determination, quality measure application and risk sharing
Alternative payment models – the rationale
These models are basically about two things:
– redefining the cost objects in healthcare
– linking payments to outcome measures
To determine its costs or profitability, each industry needs to reach agreement between providers and consumers on how that industry's products or services will be characterized for accounting and payment.
These agreed-upon products or services are that industry's "cost objects” (what gets bought and sold).
For hospitals, from the 50s through the 70s (till 1983), cost objects were "cost plus" service charges.
Diagnosis-Related Groups (DRGs) => shifted hospital cost object => cost plus => prospective payment per admission => controlling payments per admission & rewarding efficiency per admission.
For physicians, from the 50s through the 80s (till 1992), cost objects were "usual and customary" service fees.
Brief introduction: what is a "cost object"?
Physician services => corresponding tool => control payments.
Why? "Usual & customary" payments highly variable => poor cognitive physicians & rich proceduralists => vulnerability to across-the-board reductions => impeding payment control.
Resource-Based Relative Value Scale (RBRVS) => level the payment playing field per physician service => enable payment control per physician service.
But, while these programs (DRGs and RBRVS) enabled payment controls per hospital admission and per physician service, they did not address either the volume or the intensity of the hospital admissions or the physician services provided.
These were all Fee For Service (FFS) payments, so their failure to control utilization, and thus overall spending, was predictable.
Changing "cost objects" in US healthcare:
Reimbursement:
Fee For Service
Per Diem Pay
Prospective
Bundled Fees
Global Payment
Changing reimbursement strategies:
Control:
Provider
Payer & Patient
Cost Object: Provider:
Indiv Service Doc Hosp
Daily Care Hospital
Admission Hospital
Episode Docs+Hosp
All Care Accountable Care Org
"Value-Based Purchasing of Healthcare"
Reflecting who controls the healthcare system, it redefines the final cost objects progressively => less from the perspective of the provider => more to that of the patient (and the payer).
In doing so, it progressively redefines what had been production (revenue) centers as service (cost) centers.
Who gets paid for what is shifting: => away from volume and intensity of services (no thanks
from colleagues (or patients) for “88305s” or “88342s”);=> toward contribution to outcomes (possibly some
appreciation for timely and useful direction of care).
So, it seems clear there is a need to change cost objects associated with implementing these alternative payment models, but why are outcome quality measures equally necessary?
What does this shift in control portend?
Standard vs. behavioral economics – which works in healthcare?
The alternative payment models attempt to address a perceived core defect in the "healthcare marketplace" from a behavioral economic perspective
The standard economic requirements for an efficient marketplace include rational actors, rationally acting on reliable information
Q: Do patients make rational, logical, well-informed decisions, weighing risks against benefits, to maximize the value of their healthcare?
A: No (certainly not in accord with the standard economic model).
Classic article: Tversky A, Kahneman D. The Framing of Decisions and the Psychology of Choice. Science 1981;211:453-8
So, an essential element of all alternative payment models is:
External (to patient and provider) measures of the value of the healthcare services provided in terms of clinical outcomes
Alternative payment model programs thus have core outcome quality performance measures as well as cost measures
And both sets of measures are important because, between them, they define "value"
The alternative payment model "value proposition" is:
"Value Proposition" <=> Ratio of Outcomes to Resources"Value Proposition" <=> Ratio of Outcomes to Resources
QUALITY OF OUTCOMESQUALITY OF OUTCOMES
QUANTITY OF RESOURCESQUANTITY OF RESOURCES
•
For a pathologist, practicing in these alternative payment model systems, how might such a "Value Proposition" be formulated?
#1 – Pay for Performance Programs & Pathologists
The problem with P4P for pathologists has been that performance measures – the Eligible Professional Meaningful Use Objectives for example – are very primary and office-based care-centric*
*In January 2013, a guidance was issued that would appear to allow MU qualification of some pathologists, though it does not seem consistent with the original legislative language, or intent
Specialists who share an EHR with other providers also can count in the numerator those patients for whom other providers have entered information. While there are many objectives that require the recording of standardized patient information, these objectives do not specify who should enter the information. Therefore a shared EHR, documentation accompanying referrals and orders, or receiving information through electronic exchange are excellent strategies for meeting these objectives.
Meaningful Use for Specialists Tipsheet Last Updated: January 2013
A risky alternative to exemption from being an “Eligible Professional”
Eligible Professionals – 15 Core Objectives
1. Computerized provider order entry (CPOE)2. E-Prescribing (eRx)3. Report ambulatory clinical quality measures to CMS/States4. Implement one clinical decision support rule5. Provide patients with an electronic copy of their health information, upon
request6. Provide clinical summaries for patients for each office visit7. Drug-drug and drug-allergy interaction checks8. Record demographics9. Maintain an up-to-date problem list of current and active diagnoses10. Maintain active medication list11. Maintain active medication allergy list12. Record and chart changes in vital signs13. Record smoking status for patients 13 years or older14. Capability to exchange key clinical information among providers of care and
patient-authorized entities electronically15. Protect electronic health information
#2 – Bundled Care Payment Initiatives & Pathologists
Pathologists face very similar difficulties participating in bundled care initiatives, because episodes of care are typically treatment-oriented rather than diagnosis- oriented
The reason this is a problem for pathologists is that:an essential requirement for success under bundled payments is to identify bundles of care in which you can demonstrate that your services within the bundle improve the patient outcome or decrease the medical expense
Treatment-oriented bundles generally presume the diagnosis, thus our role in improving outcomes and managing costs, while quite real, is typically small
CMS – 48 Bundled Payment Episodes of Care
Major joint upper extremity
Amputation
Urinary tract infection
Stroke
Chronic obstructive pulmonary disease, bronchitis/asthma
Coronary artery bypass graft surgery
Major joint replacement of the lower extremity
Percutaneous coronary intervention
Pacemaker
Cardiac defibrillator
Pacemaker Device replacement or revision
Automatic implantable cardiac defibrillator generator or lead
Congestive heart failure
Acute myocardial infarction
Cardiac arrhythmia
Cardiac valve
Other vascular surgery
Major cardiovascular procedure
Gastrointestinal hemorrhage
Major bowel
Fractures femur and hip/pelvis
Medical non-infectious orthopedic
Double joint replacement of the lower extremity
Revision of the hip or knee
Spinal fusion (non-cervical)
Hip and femur procedures except major joint
Cervical spinal fusion
Other knee procedures
Complex non-cervical spinal fusion
Combined anterior posterior spinal fusion
Back and neck except spinal fusion
Lower extremity and humerus procedure except hip, foot, femur
Removal of orthopedic devices
Sepsis
Diabetes
Simple pneumonia and respiratory infections
Other respiratory
Chest pain
Medical peripheral vascular disorders
Atherosclerosis
Gastrointestinal obstruction
Syncope and collapse
Renal failure
Nutritional and metabolic disorders
Cellulitis
Red blood cell disorders
Transient ischemia
Esophagitis, gastroenteritis and other digestive disorders
#3 – Accountable Care Organizations & Pathologists
First, how does "Accountable Care" work … what's the "accounting"? Greatly simplified, there are four steps:
First, since this is population-based care, patients are "attributed" to the ACO – this is typically by determining whether the eligible providers (primary care only vs. primary and specialty; physicians vs. physicians and others) in the ACO provided a plurality of their evaluation and management services over the preceding year
Second, demographic characteristics and prior medical service utilization by these patients is used to calculate baseline total medical expense and risk adjustment for the ACO population; these are used to calculate a projected medical expense trend
Third, payments are made to providers both in and outside of the ACO, and process and outcome of care measures are collected
Fourth, at the end of the year, the total medical expenses of the ACO patients are compared with the projected trend to calculate savings/losses; performance on process and outcome measures is factored in (gate or additional), and savings/losses are shared
ACA conceptual shared savings model
https://www.cms.gov/OfficeofLegislation/Downloads/AccountableCareOrganization.pdf
Bending the cost curve…
The "Spending Benchmark" is the "Shared Savings"
equivalent of the FFS SGR.
What is the essential logic of an ACO?Society says to hospitals, physicians, &c.
"We're sure there's much too much cost in our healthcare system,
but we don't know exactly where it is…."
"So you figure it out…
…and we'll just pay you less until you do!"
While this may work…
…it will be neither obvious nor easy.
Why?
Because we're already doing the easy and obvious thing, which has been to pay for healthcare services
What society has always wanted has been health, and society's been willing to settle for healthcare, but it's becoming unwilling to pay for services…
What are the alternatives to "services"?
What does society/other healthcare system providers want from surgeons?
Not "operations", but responsibility/care for patients who have conditions that require surgical management
What does society/other healthcare system providers want from pathologists?
Not "test results", but responsibility/care for patients who have conditions that require laboratory diagnosis
The past three decades have gotten us used to being paid “per click”.
Scary though it is, we need to think about alternatives, because everybody else is!
So, how can pathologists participate…
…in an ACO or other alternative payment program?
Well … what do we think our "value proposition" is?
Remember: if we as pathologists don't put forth our own "value proposition", our default is to be aggregated with other essential infrastructure services, as commodities.
Recap of economic elements of care models
FFS – each service provided is presumed to be of independent value
Economics – do as much as reasonably justifiable
Bundled care – performance on each episode of care is measured against its outcomes and its cost inputs
Economics – do what has clinical benefit and is cost effective
Accountable care – health and total medical expense of a patient population, as measured against achievement of the "Triple Aim":
Improving individual care
Improving population health
Reducing per capita cost of care
Behaviors that work in a bundled care environment will also be useful in an accountable care environment and there are others, specific to population management…
34
Some suggestions on the pathologist value proposition in alternative payment scenarios:
For a diagnostic anatomic pathologist
For a laboratory medicine pathologist
There is a progressive evolution from individual patient service efficiency (applicable to bundled payments/accountable care) to patient population coordination and management services (applicable to accountable care)
ACO Challenge: the Pathologist Value Proposition
Diagnostic/prognostic care efficiency/coordination
Not UOS FFS – that is, not 88305s, 88342s, &c.
Instead, e.g., GI endoscopy service – work with gastroenterologists to optimize biopsies, taking responsibility for ancillary studies (now overhead, not revenue).
Work with clinician on TAT:
Short TAT = more upfront levels, stains, &c.
Long TAT = sequential ordering, only as needed.
More expert, experienced = quicker results, fewer resources.
Monitor AP-based screening for follow-ups:
Surgical and/or cytological follow-ups: GI, GYN, GU.
Advise on/coordinate emerging molecular/genomic diagnostics.
Bottom line, value ≠
volume!
Diagnostic anatomic pathology
AP bundled/accountable care measure
For surgical pathology services, perhaps pathologist value could be measured by:
specimen level services (88300 through 88309)
less ( −
)
special study services (88312 through 88388)
Obviously, baseline expectations would have to be set, based on specimen type and case mix, and predicated on meeting quality standards
Laboratory medicine care efficiency/coordination
Advise on/coordinate test menus/locations:
ER, office, POC, hospital, send out, &c.
Advise on relative patterns of routine utilization:
Too much (too many specimens).
Too little (not frequent enough).
Wrong kind (of specimen/test).
Monitor lab-based screening for medical interventions/follow-ups:
Anticoagulation, hemoglobin A1c, therapeutic drug monitoring, &c.
Monitor patient labs across ambulatory, clinic, hospital settings.
Advise on/coordinate emerging technologies/assays.
Bottom line, value ≠
volume!
Laboratory medicine
Lab med bundled/accountable care measure
For laboratory medicine services, perhaps pathologist value could be measured by:
Budgeted time / resources => initial E&M service / symptomatic ICD => E&M service / actionable ICD
Example: 780.7 Malaise and fatigue => 280 Iron deficiency anemia or 244 Acquired hypothyroidism
Obviously, baseline expectations would have to be set, based on case mix and specimen type, and predicated on meeting quality standards
Since patients will still need our services, the question becomes, will we be participants, or provider/suppliers?
Provider/suppliers are commodities – to a good first approximation, as vendors, cheaper is what's wanted.
Participants are at risk – the challenge is to demonstrate value – the reward is participation, clinically and financially, in the enterprise.
Which do we want to be?
The fundamental ACO issue for pathologists is:
This will depend on:
The structure ("At the table, or on it!")
Our relationships (Is this a surprise?)
The credibility of our value proposition.
Is this "transformation," as the CAP puts it?
Maybe, but with many local choices to make.
Let's get practical…if you aren't in an ACO already, you almost certainly will be soon…
Will we be participants or provider/suppliers?
http://assets.fiercemarkets.com/public/sites/healthcare/acomaps/medicareaccountablecareorganizations.jpg
http://www.leadingage.org/uploadedFiles/Content/About/CAST/Resources/Advancing_Accountable_Care.pdf
So, what should you do?
You need to develop and advocate a value proposition for pathology consistent with your mission and in alignment with your healthcare system's approach to alternative modes of healthcare financing
First, identify your own practice variations
Second, coordinate with your clinical colleagues
Third, develop models for participation in clinical cost control/quality improvement/care redesign
Learn what tactics your healthcare system will employ to address coordination of care, and figure out how can you participate in them
Evidence Based Healthcare System Care Improvement / Cost Reduction Tactics
Longitudinal Care Episodic CarePrimary Care Specialty Care Hospital Care
Access to care
Patient portal/physician portal Access Program
Extended hours/same day appointments Reduced low acuity admissions
Expand virtual visit options
Design of care
Defined process standards in priority conditions (multidisciplinary teams)
High risk care management
Shared decision making
Re-admissions
Hospital Acquired Conditions
100% preventive services Appropriateness Hand-off and
Continuity programsChronic condition management
EHR with decision support and order entry
Incentive programs
MeasurementVariance reporting/performance dashboards
Quality metrics: clinical outcomes, satisfaction
Costs/population Costs/episode V 2.0
The next step is to identify opportunities:
Internal inefficiencies – identify unwarranted internal variation (=> quality/efficiency standards/protocols)
External inefficiencies – identify unwarranted external variation (=> accountable/bundled care potential)
Extensive involvement in multidisciplinary teams
In-house alternatives to send-outs (with clinicians)
Intake criteria for care pathways (with clinicians)
Reassignment of activities below qualifications
Automation of manual processes
A global pathology value statement:
This value will include
(1) working with clinical colleagues to optimize testing protocols,
(2) reducing unnecessary testing in both clinical and anatomic pathology,
(3) guiding treatment by helping to personalize therapy,
(4) designing laboratory information technology solutions that will promote and facilitate accurate, complete data mining, and
(5) administering efficient cost-effective laboratories.
Sussman I, Prystowsky MB. Pathology service line: a model for accountable care organizations at an academic medical center. Hum Pathol. 2012 May;43(5):629-31. Epub 2012 Feb 13. Department of Pathology, Montefiore Medical Center and Albert Einstein College of Medicine, Bronx, NY 10467, USA.
